Tag: Fintech

On December 14, a fintech venture dubbing itself Robinhood launched a consumer-banking product touting a no-fee, high-return, and yet somehow still profitable checking, savings, brokerage, and payment product. It didn’t take long to see that Robinhood would steal from the poor to feed the rich. Speculative investors have somehow bid the company up to a $5.6 billion valuation despite, as even a cursory analysis of public documentation shows, a flawed business model premised on a series of increasingly improbable assumptions about the transformative powers of financial technology and the malleability of U.S. financial regulation. Continue reading “Robinhood and the Sheriff of Nottingham: The Fintech Financial-Inclusion Illusion”→

After crafting the initial features of the post-crisis bank-regulatory framework, global and U.S. policy-makers were dumbfounded to discover that costly new rules changed the competitive financial-market balance. Mirabile dictu, when costs rose for banks, banks changed their business model to cling to as much investor return as possible instead of, as regulators apparently expected, taking it on the chin to ensure ongoing financial-service delivery at whatever pittance of a profit remained. As markets rapidly and in some cases radically redefined themselves, global regulators dubbed the beneficiaries of this new competitive landscape “shadow banks.” At themost recent meeting of the FSB Plenary, they changed shadow banks to the less stealthy moniker of “non-bank financial intermediaries.” A newBIS working papershortens the scope of shadow banking to “market-based finance,” going on to assess a fundamental question: does the transformation of financial intermediation from banks to non-banks alter the income and equality landscape? The answer: It’s complicated.Continue reading “This Little Equality Goes to Market”→